Today, we are bringing some interesting insights happening recently. For starters, we have another U.S.-China showdown. If you think it never ends, you are not alone. The air freight industry is booming as rates and volumes skyrocket because more supply chains seek to avoid the troubles on the Red Sea. Retailers are fighting to prevent losses, and China is making a comeback, among others.
Enough introduction, lets dive in.
U.S. Crackdowns on Chinese Import Loopholes
Over the years, the Chinese have done an excellent job offering cheaper labor and commodities to businesses and supply chains around the world. As its largest importer, the U.S. has probably significantly benefited from that as well…at least until the trade wars and other economic showdowns started.
China is not one to sit still and has found ways around imports and duties. The primary goal here was to offer cheap goods to consumers while avoiding the financial burden that came with it. AKA Deminimis Shipments.
Anyway, the U.S. noticed. And depending on how you look at it, it can come off as ingenuity (which is excellent) or broad daylight robbery (which is not so great). The chicken has come to roost, and the U.S. seems to not stand for it much longer, looking to take measures to crackdown on that loophole. It will be interesting to see what they come up with and how Chinese businesses handle the changes.
The Air Freight Industry is Booming, Thanks to Red Sea Challenges
It is one geopolitical crisis after another. Frankly, supply chains are tired. However, stakeholders can do little beyond roll their eyes, and think of ways to avoid disruptions to their operations by finding alternatives to the Red Sea route. You will recall that it was a significant shipping route for many global supply chains.
One of the strategies supply chains are leveraging is air freight. While air freight screams “too expensive,” it beats getting your cargo delayed or stolen. The disruption is just more money than it is worth. For some companies, taking other routes might just be too expensive or time-consuming. So yes, such supply chains favor air freight, and as you would expect, the demand and supply economics are doing their thing.
Yes, air freight rates are rising amid increased volumes from these supply chains, and freight contract negotiations are getting tricky. The question is how long they can continue and how expensive it has to get before localization starts looking like an exciting option.
Retailers Go To War Against Rising Theft and Shrink
It is increasingly looking like the Wild West for many retailers across the globe. From Europe to America and the rest of the world, retailers could spend millions to make goods available to consumers, only to have their goods misplaced, causing inventory shrink, or stolen from the aisles.
Well, there is only so much you can blame the government, bad policies, and culture before you can start doing something. Businesses have begun to fight back, leveraging technology to gain more visibility into inventories, while teaming up with law enforcement and working on sophisticated strategies to combat the rising crime wave.
We are talking about body cameras, door scanners that won’t open until they confirm you paid for everything in your possession, and even crime intelligence platforms. Retailers forced to act like surveillance companies are just a reflection of how bad the situation has gotten.
Imports From China To The U.S. Are Making a Rebound
Many of the Chinese manufacturing sectors had to close down earlier this year due to the celebration of the Lunar New Year. Well, subdued manufacturing meant subdued imports. So, as was expected, things slowed down a bit.
Factories are now up and running, though. This means more imports into the U.S. from China. However, the freight spot rates are much higher than the months before the shutdown for the Chinese New Year.
National Retail Federation and Hackett Associates expect inbound cargo volume at the nation’s major container ports to top two million units by May. That will be a first since the fall of last year. All of this comes amid supply chain and shipping challenges across the globe.
Big Upgrade in H1 Import Forecast
Surprise surprise! Earlier, we discussed how imports from China are slated to be the highest since last fall. The National Retail Federation now expects an 11% year-on-year increase for the first six months of this year, compared to last year.
Again, all of these are amid disruptions to the supply chains. The U.S. consumer demand remains strong, and retailers leave no stone unturned to ensure they get all they need. The only question here is how powerful these disruptions can get and how will the retailers or supply chains respond.
We Simplify Shipping and Freight Operations for Businesses and Supply Chains
Shippers across the globe are facing an uphill battle to get their orders delivered at the right time and in the right volume. You might too. And we know that, for the most part, it is not your fault. The Silq platform helps streamline shipping solutions for shippers. We have had great success doing it for others, even amidst the sea of challenges plaguing many supply chains today. We can do the same for you. Connect with us today, and let’s talk further.
